Legend goes that a cobra infestation plagued Delhi in the 1800s. So the British Raj decided to offer a cash reward for every dead cobra. The menace briefly subsided, until the plan backfired. Savvy Indians built cobra farms so they could have a constant supply of snakes to kill and redeem for money. The British eventually uncovered the scheme and ended its incentive. With no use for the now worthless snakes, breeders released the creatures onto Delhi’s streets.
German economist Horst Siebert coined the term the “cobra effect” in his 2001 book of the same name, to refer to solutions that end up making problems worse. Since the book’s release, swathes of economists, business gurus, and academics have popularized the colonial-era policy as a framework to explain failed incentives in everyday life. Yet, there is little evidence to support the veracity of this British Raj snake tale. That so many have latched onto it says something about the stories we choose to believe in the first place.